Economic week ahead: SA waits for mining production output

Barring a flare up on the Crimean Peninsula, this week is likely to be comparatively quiet on the economic front. The most significant data releases scheduled in South Africa are updates on the country's current account position, mining production and manufacturing output.

In the US, retail sales and business inventories data will be released over the coming days.
In Europe, a series of inflation updates and policy clarifications will likely dominate the headlines. And in Asia, India's latest inflation figures and central bank decisions in Thailand and Indonesia will take centre stage. Here is your guide.

Africa
South Africa will release fourth quarter current account data on Wednesday. January's mining and manufacturing data will follow from Statistics South Africa on Thursday.

Economists expect South Africa's current account deficit to have narrowed to R206-billion in the fourth quarter from R233-billion in the third. As a percentage of gross domestic product, that figure would translate into a still high 6.1%. The country's current account deficit is, however, expected to narrow sharply over the coming months as demand for imports wane and export volumes pick up.

Analysts at 4CAST expect Thursday's manufacturing production release to show that output rose 3.3% from a year earlier in January. If the forecast proves accurate, this would be an improvement on December's 2.5% expansion.

Elsewhere on the continent, Egypt will release last month's consumer price index (CPI) readings on Monday. CPI data will follow from Ghana on Wednesday and is also expected from Angola sometime this week.

Egypt's inflation rate declined in January but remained in double-digits. At their February meeting, the Central Bank of Egypt's monetary policy committee said that they expect inflation to slow over the next few months and that the upside risk to the inflation outlook is "limited due to the persistently negative output gap since 2011."

Ghana's year-on-year inflation rate also fell in January to 0.2% from 2.8% in December, mainly as a result of lower food price pressures and a slowdown in the rise of fuel prices. Inflation is expected to continue its downward trend.

United States
American markets are in an upbeat mood after Friday's surprisingly strong monthly jobs report. Barring a serious deterioration in the situation in Ukraine, there is little on the docket this week to foul their tempers.

The first high-profile economic reports of the week will come on Thursday as officials release last month's retail sales figures and last week's unemployment claims count. Retail sales probably rose 0.2% in February, an improvement on January's 0.4% decline. First time filings for federal jobless benefits are expected to have risen to 330 000 in the week ended March 8 from 323 000 in the prior week.

Later in the day, government will release February's import and export prices and January's business inventories data. Consensus is that, on a monthly basis, export prices edged up 0.2% and import prices rose 0.5%. Business inventories – an important indicator of the near-term direction of production – likely rose 0.4% from December to January.

Analysts will be scrutinising Thursday's business inventories data for information on the rise in business inventories relative to business sales. This stock-to-sales ratio rose in December to its highest level since April, a time when the world's largest economy gaining momentum.

On Friday, attention will turn to government's latest producer price index for final demand (PPI-FD) and the Reuter's/University of Michigan's March consumer sentiment index. The PPI-FD is expected to have risen 0.2% in February, the same rate of increase recorded in January. The consumer sentiment gauge is likely to rise marginally to a reading of 81.8 from 81.6.

Europe
France – Europe's number two economy – will report industrial production figures on Monday. The UK's numbers will follow on Tuesday. French output likely rose 0.5% from a month earlier in January, a reversal of the previous month's 0.3% decline. In the UK, industrial production growth probably slowed to 0.2% monthly growth from 0.4% previously, largely as the result of bad weather.

Production figures for the eurozone as a whole will be released on Wednesday. The common currency bloc experienced a large 0.7% monthly drop in production in December, but a rebound in January's figures is widely anticipated. Consensus is for a 0.5% gain.

Inflation figures will dominate the back-end of the week. France and Italy will report CPI data on Thursday followed by Germany on Friday.

France's CPI fell 0.6% from a month earlier in January, but is expected to have risen 0.4%, month on month, in February. On an annual basis, prices probably only rose a mere 0.8% from a year earlier. Italy's price index likely fell 0.1%, month on month, the same rate of decline recorded in December. Germany probably experienced a 0.5% monthly gain in prices.

Beyond these data releases, economists and investors will pay close attention to Bank of England governor Mark Carney's appearance before the UK's Parliament on Tuesday. In response to better than expected growth, Carney recently abandoned his previously issued, clear monetary policy guidance in favour of a more nebulous pledge to keep interest rates low for an extended period of time. As a result, markets will be hoping he uses his public appearance this week to provide some clarity. He is unlikely to give it to them.

Asia
Data released on Sunday showed that China's consumer prices rose at their slowest rate in over a year last month. The country's CPI rose 2% in February from a year earlier. Producer prices fell for the 24th consecutive month, dropping 2% from a year earlier.

Yesterday's inflation data could fuel further concerns over the health of the world's second largest economy in some quarters, but may be welcome news for investors. With inflation clearly not a concern, officials have ample room to loosen policy should China's economy show signs of further slowing.

Looking ahead, India will release February's consumer inflation and industrial output data on Wednesday. Although consumer price pressures eased in January, stubbornly high inflation remains a priority for the country's policymakers. Reserve Bank of India governor Raghuran Rajan vowed to rein in inflation, even at the expense of growth.

Also on Wednesday, the Bank of Thailand will meet to consider interest rates. Months of political protests have taken their toll on the country's economy and most economists expect policymakers to cut rates by 25-basis points as a result.

On Thursday, attention will shift back to China for last month's industrial output, retail sales and urban fixed investment releases. Industrial production growth likely slowed to 9.5% year on growth from 9.7% previously. Retails sales probably grew by 13.5% from a year earlier.

Indonesia's central bank will also issue make their latest policy pronouncements on Thursday. Officials have kept rates steady at their past three meetings and are widely expected to do so again this week.

Matt Quigley

Matt Quigley writes the weekly economic preview for the Mail & Guardian.
His blog on the South African economy can be found at www.thoughtleader.co.za/mattquigley
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